£1,000 year-on-year bill hikes expected as wholesale energy prices soar

The Consumer Council has warned householders could be facing a £1,000 year-on-year increase in their consumer bills as wholesale energy prices continue to soar.

Wednesday, 20th October 2021, 4:35 pm
Updated Wednesday, 20th October 2021, 4:40 pm

The Council issued the warning after John French, Chief Executive of the Utility Regulator suggested gas and electricity bills may continue to increase until summer 2022.

Mr. French said: “In August this year, I warned consumers that we were experiencing record increases in the global price of wholesale energy. This resulted in Firmus Energy and SSE Airtricity Gas Supply increasing their regulated tariffs by 35.15% and 21.8% respectively from October 1, 2021.

“Unfortunately, there has been a rapid and sustained acceleration of wholesale gas prices since then. When we agreed to Firmus Energy and SSE Airtricity Gas Supply’s new regulated tariff at the end of August, the wholesale cost of natural gas was £1.15 per therm – a then record high.

Consumers face soaring energy bills.

"However, with continuing supply constraints, mainly from reduced gas supplies from Russia, wholesale prices peaked at a new record high of nearly £4.10 per therm in early October. In the last week, the wholesale price has reduced slightly to around £2.40 per therm, but this is still a 109% increase from the end of August.

“With such a volatile market, it is really difficult to predict how long gas prices will stay high. But as a result of these record global prices we do expect to see a significant upward pressure on bills until summer 2022."

In reaction Peter McClenaghan, Consumer Council Director of Infrastructure and Sustainability, said: “I described the energy price rises announced in September as the thin end of the wedge for consumers and, unfortunately, this is proving to be the case with pressure on household budgets continuing to increase dramatically.”

“While the Utility Regulator’s statement focusses on wholesale gas prices and their impact on our gas and electricity bills, price increases are occurring across the global energy market which will have a significant impact on Northern Ireland consumers.”

“Consumer Council figures show that the cost of home heating oil has doubled in the past year which is particularly concerning given that the majority of NI households still rely on home heating oil. Added to this, our figures show that the cost of petrol and diesel have also increased over 20% since last year.”

“This is a worrying time for consumers as these fuel price increases are driven by factors outside their control and coincide with rising inflation, proposed tax rises and increasing food costs.

“Price rises mean that by December a typical consumer could see their combined energy and travel costs rise by nearly £1,000 year-on-year.

Sinn Féin MLA Ciara Ferguson has said huge increases in energy prices will hit hardest on those already least able to afford it.

The Foyle MLA said: “News that energy prices are set to increase again is another huge blow for already hard-pressed families.

“Many families, workers and pensioners here are still reeling from the British government’s attack on their livelihoods by increasing national Insurance contributions, ditching pension protections and cutting Universal Credit and Working Tax Credit.

“These hikes in energy costs will hit hardest on those already least able to afford it.

“It’s particularly concerning that this latest hike comes at the beginning of winter when the demand for fuel will increase significantly.

“The British government must recognise the scale of the cost-of-living crisis and make additional funding available to support workers and families, and to help businesses and protect jobs.”

Mr. French said he envisaged further significant increases on both household and business energy bills in the coming weeks.

“These are challenging times, and I would encourage any consumer who is worried about paying their energy bill to contact their supplier to access the help and support that is available. There are also a number of agencies who can provide free and independent advice to households, including Advice NI, Christians Against Poverty, and Money and Pensions Service.

“Additionally, we are working with partners in the Department for the Economy, Department for Communities and the Consumer Council to actively explore practical measures to alleviate the burden of higher energy prices on consumers.

“While there appears to be no immediate sign that wholesale energy prices will return to normal levels, we will pro-actively monitor this. Should wholesale energy prices reduce, our system of regulation in Northern Ireland allows us to act to make sure that reductions are fully passed onto consumers as quickly as possible.

“Furthermore, I have written to all energy suppliers to ask them to actively support and protect consumers as tariffs increase and as winter approaches. In doing so, I re-iterated the need for energy companies to have a sympathetic approach to customers’ ability to pay. I have also reminded suppliers of their regulatory obligations to avoid customer disconnections and consider other approaches to protecting people in debt. Finally, I have asked energy suppliers to consider if they can either individually, or collectively, establish funds to help customers in immediate hardship this winter," he remarked.

Mr. McClenaghan urged consumers who are struggling with their energy bills to contact their supplier directly for help and information.

“The Consumer Council will continue to work with our Government Departments, energy companies and the Utility Regulator on the development of initiatives to help consumers experiencing payment difficulties.”